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Tuesday, 14 October 2008
Page: 9088


Ms OWENS (6:36 PM) —I rise to speak on the Dairy Adjustment Levy Termination Bill 2008, and I am aware that I am one of the few city members of parliament to do so. I suspect that most people in my electorate of Parramatta do not even know that they have been paying a levy on milk of 11c a litre for some eight years. In fact, I confess quite openly that I myself did not know until quite recently. One of my locals, Robert from Lalor Park, found me down at a mobile office at the Lalor Park shopping centre and asked me quite bluntly when we were going to get rid of it. I confess that I nodded wisely and then went back to the office to find out all about it. Lo and behold, before I could even call Robert back, I found that we were getting rid of it. I let the House know that I did not claim credit for that with my constituent Robert from Lalor Park. And here we are today discussing the final removal of the dairy levy.

There are no dairy farms in the electorate of Parramatta, although there were, some 100 years ago. Even 20 years ago, there were dairy farms in the area. But I do know quite a few people who have been through the painful process of deregulation over the last decade. We in the cities know this pain mainly as just stories; we have not experienced it ourselves. However, it is quite right that, through the dairy levy, we have contributed in some way to the process that farmers have been through over the last decade.

There are of course lots of people in my electorate who buy milk. They want fresh milk and they want it to be available. Perhaps in their daily lives they do not consider the many people who work such hard lives to make that fresh milk available. We are reminded in discussing this bill that, when we need to, we impose levies, but we also remove those burdens as soon as we can and whenever we can. We need to be slow to put our hands in the pockets of our constituents but very quick to take them out again. I am pleased to rise to speak to this bill, which does just that: it removes the levy as soon as possible, in an efficient way. It looks ahead and sees that, while we are not quite ready to bring an end to the adjustment package, we will be ready very soon, and it puts a process in place to effect an efficient wind-up.

For those who are, as I was, scratching their heads and asking what the milk levy is, I will give a very short explanation. I think Robert of Lalor Park is probably the only one in my electorate who really understands it! The dairy industry was of course highly regulated, and deregulation became the subject of debate and inquiries over several years. Finally, a report called Deregulation of the Australian dairy industry, which came out of a Senate committee inquiry, indicated that the market would force deregulation and that a soft, managed landing was preferable to commercially driven carnage, particularly among the many small producers.

The adjustment package came into being in 2000, a $1.8 billion package over a target period of eight years. There were four main components of the package: the Dairy Structural Adjustment Program, which allocated $1.63 billion in payments for eligible dairy producers; the Supplementary Dairy Assistance program, which allocated an additional $139 million in payments; the Dairy Exit Program, which provided an optional, tax-free exit payment of up to $45,000 for eligible dairy producers wishing to leave the industry; and the Dairy Regional Assistance Program, which provided $65 million to assist regional communities to adjust to dairy deregulation.

The adjustment package was funded through a levy of 11c per litre for liquid milk products. That is a levy on consumers of 11c per litre, calculated to cover the total cost of payments to producers and for administration. The levy generated around $20 million per month, and it also covered interest costs. In the early years, the outgoings to the industry exceeded the revenue from the levy and the government of the day decided to fund the shortfall with commercial loan arrangements rather than budget funding. The target period of eight years for the adjustment package has now passed and, while the last payments have been made to farmers, the levy continues in order to pay off loan debts. As of July 2008, the Dairy Structural Adjustment Fund had a deficit of approximately $205 million, but with revenue of $20 million a month it is expected to be in balance in the first quarter of 2009.

This bill is about the process of winding up the fund and removing the levy as soon as possible, while terminating it in a way that minimises the possibility of surplus funds. In other words, we will not be taking any more money from consumers than we absolutely need to wind up the fund. Currently, the Dairy Adjustment Levy generates around $20 million per month from the 11c per litre paid by consumers in shopping centres and corner shops, but that money takes around 60 days to get from the cash registers to the adjustment fund.

The act as it stands prior to these amendments requires the minister to give 28 days notice before removing the levy and, significantly, only allows the minister to give notice against receipted revenue. If winding up the adjustment fund under the current legislation, the minister would have to wait until the fund was in surplus and then give 28 days notice. That would mean that, after the minister had given notice, money would continue to flow into the fund at a rate of $20 million a month, meaning some $50 million would be collected in excess of what is needed to wind up the fund. The amendments in this bill allow the minister to consider the levies paid but not yet receipted into the adjustment fund when declaring the levy termination date and to give termination notice of seven days rather than the current 28 days.

We are also acting to ensure that the benefits from the removal of the milk levy are passed on to consumers. Any complaints or suggestion of anticompetitive conduct in relation to removal of the levy will be dealt with by the Australian Competition and Consumer Commission. I am also pleased to see that the winding up of the Dairy Adjustment Authority will not cause major dislocation to staff. It was always expected to operate for around eight years. At the peak of its operations in 2000, the authority had 83 contracted staff and a number of consultants. Reflecting the fact that it has substantially completed its functions, it now has four part-time staff.

I am very pleased to speak in support of this bill. The removal of the Dairy Adjustment Levy will mean the government will collect $20 million per month less from ordinary, everyday Australians, including those in my electorate.